Get Up To Date With ATO Div 7A Loan Requirements

Australia Tax Office Compliant Div 7A Loan Agreements (2022)

Overview

Div 7A Loan Agreements are now being put under the Microscope by the Australian Taxation Office in an effort to identify potential Tax avoidance by company directors and shareholders. It is more important than ever to ensure business owners and directors have a formal agreement in place to negate potential tax liabilities.

Div 7A Loan Agreement is called a Div 7A Loan Agreement as it relates to Division 7A of Part lll of the Income Assessment Act 1936. Division 7A of Part lll of the Income Assessment Act 1936, in particular Division 7A of the Corporations Act, allows for a business to loan money to the directors, shareholders, or associates of shareholders.

These loans are used for a number of reasons and are usually implemented in conjunction with the accountant of a business rather than the director themselves due to the potential taxation liabilities. The reason we have released these Div 7A Loan Agreements is basically just to formalise them. 

Australian Tax Office Requirements

The ATO is now looking at these loan agreements and putting him under a microscope, and they are wanting to see a formal agreement in place between the company and its director, so it's not viewed as a way of negating taxation. In particular, the ATO wants to see the term of the loan, the amount of the loan, the loan payments, the loan repayment times, whether interest is being charged, etc. So, formalising these loan agreements is a high priority for any business that uses these particular loans.

DIV 7A Loan Agreement Dashboard

Having a Div 7A Loan Agreement Dashboard provides access to the loan agreement, which can be accessed at any time, available 24/7. This is where a business can view the loan repayments, including which payments have been made and which are still outstanding. The Div 7A Loan Dashboard is the centrepiece of the loan management functionality with various other options available.

The Div 7A Loan Agreement Dashboard is where a business can adjust the Loan, adjust the loan amount, adjust the loan period, or even top up the loan. The Borrower simply renegotiates the loan with the company. It might be decided to extend the period which can be done through the Div 7A Loan Dashboard, a new loan would just automatically start. The Lender can even defer payments by adding additional payments to the end of the loan. It is totally up to the parties involved.

But most importantly the business and the Lender can access an automated annual report which sets out the principal and interest paid over the period of the loan in question, which can be submitted to an accountant who can then forward it to the Australian Taxation Office.

The Div 7A Loan Agreement back-office reporting saves an accountant enormous hours in loan reporting preparation prior to submitting your annual returns.

Having a Div 7A Loan Agreement Dashboard provides complete flexibility not available anywhere else.

Please note that we would strongly advise that all decisions, changes and management of the Div 7A Dashboard should be done in conjunction with your Accountant or Financial Adviser.

If you would like to know more about "Getting Up To Date with the Latest Div 7A ATO Loan Requirements" please feel free to request our FREE Facts Sheet here.

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